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EUROPEAN COMMISSION Brussels, 16.2.2016 COM(2016) 61 Final Proposal for a DECISION of the EUROPEAN PARLIAMENT and of the COUNCI

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EUROPEAN COMMISSION Brussels, 16.2.2016 COM(2016) 61 Final Proposal for a DECISION of the EUROPEAN PARLIAMENT and of the COUNCI EUROPEAN COMMISSION Brussels, 16.2.2016 COM(2016) 61 final Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund (application from Sweden – EGF/2015/009 SE/Volvo Trucks) EN EN EXPLANATORY MEMORANDUM CONTEXT OF THE PROPOSAL 1. The rules applicable to financial contributions from the European Globalisation Adjustment Fund (EGF) are laid down in Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/20061 (the ‘EGF Regulation’). 2. On 16 September 2015, Sweden submitted application EGF/2015/009 SE/Volvo Trucks for a financial contribution from the EGF, following redundancies2 in Volvo Group Truck Operation, EMEA and four suppliers and downstream producers in Sweden. 3. Following its assessment of this application, the Commission has concluded, in accordance with all applicable provisions of the EGF Regulation, that the conditions for awarding a financial contribution from the EGF are met. SUMMARY OF THE APPLICATION EGF application EGF/2015/009 SE/Volvo Trucks Member State Sweden Region(s) concerned (NUTS3 level 2) SE33 (Upper Norrland) Date of submission of the application 16 September 2015 Date of acknowledgement of receipt of the 16 September 2015 application Date of request for additional information 30 September 2015 Deadline for provision of the additional 11 November 2015 information Deadline for the completion of the assessment 3 February 2016 Intervention criterion Article 4(1)(a) of the EGF Regulation Primary enterprise Volvo Group Truck Operation EMEA Number of enterprises concerned 5 Sector(s) of economic activity Division 29 (Manufacture of motor (NACE Revision 2 Division)4 vehicles, trailers and semi-trailers) Number of subsidiaries, suppliers and 4 downstream producers Reference period (four months): 24 February 2015 - 24 June 2015 1 OJ L 347, 20.12.2013, p. 855. 2 Within the meaning of Article 3 of the EGF Regulation. 3 Commission Regulation (EU) No 1046/2012 of 8 November 2012 implementing Regulation (EC) No 1059/2003 of the European Parliament and of the Council on the establishment of a common classification of territorial units for statistics (NUTS) as regards the transmission of the time series for the new regional breakdown (OJ L 310, 9.11.2012, p. 34). 4 OJ L 393, 30.12.2006, p. 1. EN 2 EN Number of redundancies during the reference 647 period (a) Number of redundancies before or after the 0 reference period (b) Total number of redundancies (a + b) 647 Total number of eligible beneficiaries 647 Total number of targeted beneficiaries 500 Number of targeted young persons not in 0 employment, education or training (NEETs) Budget for personalised services (EUR) 2 869 938 Budget for implementing EGF5 (EUR) 119 580 Total budget (EUR) 2 989 518 EGF contribution (60 %) (EUR) 1 793 710 ASSESSMENT OF THE APPLICATION Procedure 4. Sweden submitted application EGF/2015/009 SE/Volvo Trucks on 16 September 2015, within 12 weeks of the date on which the intervention criteria set out in Article 4 of the EGF Regulation were met. The Commission acknowledged receipt of the application on 16 September 2015 and requested additional information from Sweden on 30 September 2015, within two weeks of the date of submission of the application. Such additional information was provided within six weeks of the request. The deadline of 12 weeks of the receipt of the complete application within which the Commission should finalise its assessment of the application's compliance with the conditions for providing a financial contribution expires on 3 February 2016. 5. The Commission was exceptionally unable to comply with this deadline. The explanation, in accordance with Article 8(4) of Regulation 1309/2013, is that, there was an exceptional shortage of expert staff in the period during which the Commission prepared its proposal. Eligibility of the application Enterprises and beneficiaries concerned 6. The application relates to 470 workers made redundant in Volvo Trucks and 177 in 4 suppliers and downstream producers. The primary enterprise operates in the economic sector classified under the NACE Revision 2 Division 29 (Manufacture of motor vehicles, trailers and semi-trailers). The redundancies made by the primary enterprise are mainly located in the NUTS level 2 region of SE33 (Upper Norrland). Enterprises and number of dismissals within the reference period Volvo Group Truck Operation EMEA 470 Caverion 6 IL Logistics AB 24 Isringhausen 57 Lernia 90 5 In accordance with the fourth paragraph of Article 7 of Regulation (EU) No 1309/2013. EN 3 EN Enterprises and number of dismissals within the reference period Total no. of enterprises: 5 Total no. of dismissals: 647 Total no. of self-employed persons whose activity has ceased: 0 Total no. of eligible workers and self-employed persons: 647 Intervention criteria 7. Sweden submitted the application under the intervention criteria of Article 4(1)(a), which requires at least 500 workers being made redundant over a reference period of four months in an enterprise in a Member State, including workers made redundant by suppliers and downstream producers and / or self-employed persons whose activity has ceased. 8. The reference period of four months for the application runs from 24 February 2015 to 24 June 2015. 9. The redundancies during the reference period are as follows: – 470 workers made redundant in Volvo Trucks, and – 177 workers made redundant in 4 suppliers and downstream producers of Volvo Trucks. Calculation of redundancies and of cessation of activity 10. The redundancies during the reference period have been calculated as follows: – 647 from the date of the de facto termination of the contract of employment or its expiry. Eligible beneficiaries 11. The total number of eligible beneficiaries is therefore 647. Link between the redundancies and major structural changes in world trade patterns due to globalisation 12. In order to establish the link between the redundancies and major structural changes in world trade patterns due to globalisation, Sweden argues that the manufacture of commercial vehicles, a relatively small segment within the large automotive industry, is no longer dominated by European and North American manufacturers. While the manufacturers based in the Triad markets (North America excluding Mexico, Europe and Japan) are the undoubted technology leaders, the newly emerging Asian truck manufacturers in China and India have gained access to new technology from joint ventures with established market leaders in the West. 13. China is now the leader in the global production of commercial vehicles with a share of 34,1 %. In 2014, the US remained the second largest manufacturer of commercial vehicles (2.8 million units), accounting for 15% of the world share. The EU ranked third, with almost 2.2 million units produced, 12.1% of the world total. The US, the EU and China together account for more than 60% of total world commercial vehicle production. Global production of commercial vehicles remained stable in 2014 ( - 1%), registering more than 18 million units, with an increase in the Triad markets. Production of commercial vehicles in the EU grew thanks to the light commercial vehicle segment which, with its 1,8 million units, represented almost 82% of total EN 4 EN commercial vehicle production. The heavy truck production segment within the commercial vehicles market however registered a negative trend compared to 2013 6. 14. A serious shift in EU trade was recorded in 2014 with EU manufacturers' exports declining and an increase in the import of vehicles. In 2014, EU commercial vehicle exports showed a decline by EUR 3.9 billion in light commercial vehicles (-12.5%) and EUR 6.3 billion in heavy commercial vehicles, buses and coaches (- 10 %)7. This led to an overall decline in EU exports (- 11 %). Total commercial vehicle imports into the European Union increased (+ 10.7 %)7. More than half of EU commercial vehicle imports came from Turkey (+ 2.4 %), with China in second place (+ 2.4 %). A significant increase in imports from the US (+ 9.3%) and, even more so, Thailand (+ 51.7 %) has been observed7. As a result of the trend illustrated by the figures above, the EU trade balance for commercial vehicles, while still positive, is 25 % lower than the previous year. 15. A number of Asian producers have emerged as formidable players and while they are essentially supplying their domestic markets, they are also developing the technology to compete on the world stage. In order to be able to compete in the truck sector, European manufacturers will have to increase efficiency at production facilities in the mature markets. The Volvo strategy8 clearly illustrates a response to these trends, with Volvo launching optimisation and cost saving measures while at the same time investing aggressively in Asia, as seen in the 2013 agreement with the Chinese manufacturer Dongfeng Motor Group Company Limited, (DFG) which led to the acquisition of 45 % of the DFG subsidiary, Dongfeng Commercial Vehicles8. 16. In line with the recent figures above, the non-EU manufacturers of commercial vehicles and the suppliers of Original Equipment Manufacturers (OEM) are becoming increasingly sophisticated and able to target the European market with their exports. 17. Consultancy company Deloitte suggests9 that the low-cost segments of the truck market are now gradually building capacity and entering the higher standard segments, in many cases by committing to joint ventures with Triad market manufacturers and/or key suppliers. Structural changes are needed to keep profitability in the European truck market. 18. In the past few years we have seen the industry consolidate and adjust its manufacturing footprint on a global scale to bring it more into line with reduced demand around the world. The acquisition of Scania by MAN and Volkswagen Commercial Vehicles is one of the latest examples of efforts to create a leading commercial vehicles group.
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